What is a pension fund?
A pension fund is a pool of money which is invested by a pension company in stocks, bonds and several asset classes, such as real estate, infrastructure and private equity.
These funds are made up of financial contributions from both the employer and employee which build up over a number of years. This money is then invested in those assets, to which the funds can benefit or suffer from inflation.
Furthermore, these financial investments benefit from very competitive charges and are also tax-free, as the Government returns any income tax deducted from the pension fund contributions.
The money which is invested then becomes available to people of retirement age who can withdraw the money through a variety of ways. These include the option of a lump sum or an ongoing, fixed monthly payment for the remainder of a person’s life.